AI could make ABF substrate production three to four times more precise, says Pegatron chairman

Pegatron Chairman Tung Tzu-hsien sees long-term potential for Kinsus, the group’s substrate-making subsidiary, partly because the company has not built large factories in China. That gives it what he called a “natural advantage” as manufacturers face scrutiny over the origin of goods.

Asked about an investigation into rival Unimicron over alleged origin laundering, Tung said such practices were especially risky amid current U.S.-China tensions. “Origin laundering is violating Trump’s biggest taboo,” he said, urging Taiwan’s industry to protect the opportunity it has gained by obeying the law and avoiding actions that cross U.S. red lines.

Tung described the investigation’s impact on the broader industry as a temporary, isolated event and said he hoped the controversy would pass quickly. He called on companies to follow international trade-security practices and maintain a stable understanding of their responsibilities.

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Origin laundering is violating Trump’s biggest taboo.

He said ABF substrates had suffered a downturn seven or eight years ago as packaging methods changed and chipmakers pursued different technology strategies. Some precision processes were handled internally by wafer manufacturers, limiting the development of more advanced ABF products. Over the past three or four years, however, technical bottlenecks have changed the calculation. Using semiconductor-grade processing for every application can be extremely expensive, while shifting some demand to ABF substrates could reduce costs to about one-tenth while maintaining transmission performance.

As AI pushes chip designs beyond the specifications of the PC and smartphone eras, ABF substrates and PCBs increasingly require finer lines, smaller drilled holes and smaller through-holes. Tung said the industry is approaching semiconductor-level precision. Semiconductor companies are now working with substrate makers on specifications and may provide funding and research incentives. Taiwan’s strength in mass production, he said, could help suppliers upgrade products and widen their distance from lower-cost Chinese competitors. AI is also increasing component demand: around AMD or Intel CPUs, eight to 10 capacitors were once common, while NVIDIA’s Grace chips and high-bandwidth memory systems may require about 50.

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The original ten became fifty.